Dirty tricks....lenders getting brokers and mortgage managers to do their advertising???
Comparison rate under fire
http://www.infochoice.com.au/home-loans/news/comparison-rate-under-fire/34234/2/16
18 June 2008
18/06/2008
Lenders will no longer be required to provide comparison rate schedules to borrowers, in a proposed change to consumer credit rules that follows the publication of a damning report on the mandatory comparison rate system. The Ministerial Council of Consumer Affairs has agreed in principle to repeal a requirement in the Consumer Credit Code that lenders publish a comparison rate schedule. The MCCA has also agreed to revise the format and calculation of comparison rates used in advertising. The decision came after consideration of a review of the impact of the mandatory comparison rate scheme, which has been a part of the Consumer Credit Code since 2003, that was presented to the MCCA early in May.
The review, by Hawkless Consulting, concluded that "it has not been possible to demonstrate a benefit" from the scheme. Hawkless found that lenders restructured their products so that some of the fees, such as deferred establishment and discharge fees, came under the heading of "non-ascertainable fees" and did not have to be included in the comparison rate. Lenders stopped referring to interest rates in their advertising. As long as they do not mention the rate on the product they do not have to include the comparison rate. Another tactic has been to quote a reference rate, such as "rates start from 7 per cent". Quotation of a reference rate does not carry the obligation to include a comparison rate. Lenders would get brokers or mortgage managers, who were not covered by the Credit Code, to advertise their products.
Source: The Sheet